Cheering disaster

Aussie, Aussie, Aussie, Oi, Oi, Oi. Doesn’t sound like a currency column does it? Nor should it. But the question has to be asked as to why there is such triumphalism in the reporting of the Australian dollar’s move above parity and why has it intensified recently as we reached a new all time high.

Latest posts


Buying miners and groceries

Two events have the market buzzing today: the bid by China’s Minmetals Resources to buy Equinox for $7, and the announcement that Grant O’Brien will replace Michael Luscombe as CEO of Woolworths. A bit from each side of the two speed economy. The bid for Equinox is below the traded price of $7.35 and brokers


We’ve lost our way

Over the weekend I was reading the local newspaper which contained a 3 page spread about  families who are struggling with day to day life because of the rising cost of living, mostly energy. In the same week it was determined that the new carbon tax would cost Australian families approximately $900/year and oil approaching


Hawks and doves

So, it’s rates day. The usual suspects are out pounding the pavement. All over the media, currency boffins are calling for hawkish rhetoric from the RBA. But they’re all outdone by Australia’s one-man inflation fighter, former deputy governor of RBA, Henry Thornton, who calls for a hike today: Wage claims are on the march, with


March 5 links: The lucky country

Rockets: grains. Up: energy, metals. Flat: $US, ore. Down: Aussie. Former spook schools CNN on Libya. Zero Hedge Must watch video Rebels sell first oil. Reuters US flips in Yemen. Telegrpah Climate change sceptic flips. Paul Krugman Greenspan is a fox. Peter Hartcher Barney Frank responds. FT Shouldn’t have. Shoulda let Greenspan hang himself. Regulating shadow banking. The Money View


So much for the Californian housing shortage

Let’s take a trip down memory lane. It’s early 2006 and the median house price in Los Angeles-Orange County, California has hit $582,000. Demographia has just released its latest International Housing Affordability Survey showing that Southern California has the most expensive housing market out of the six nations surveyed. Property speculation is at fever pitched.


Building Revival Forum 2011

No it is not a Hillsong fundamentalist production , although I could easily find some parallels. The Building Revival Forum 2011 is in fact a Queensland government initiative. On 12 April, a Building Revival Forum will be held with key industry stakeholders to brainstorm ways to kick start Queensland’s vital construction industry, which is still suffering


Michael Pettis: China easing off tightening

Exclusively from Michale Pettis’ newsletter: Three months ago during their 2010 Q4 conference, the PBoC said that they believed that the global economic recovery would continue in 2011, although they acknowledged a great deal of uncertainty. The PBoC also said that stabilizing the price level was their top priority, and the central bank planned to


Leigh Harkness on Bank Welfare

Leigh Harkness is back with his unique perspective on the Australian macro-economy for another guest post, this time on “Bank Welfare”. Banks have prospered under the floating exchange rate system.  They have been able to lend as much as they like without any concern about affecting the balance of payments.  The exchange rate adjusts to


Gear down for stocks

The global financial crisis was largely confined to a bloated and increasingly reckless financial sector. Yes, government debt positions worsened and excessive household debt was exposed. But non-financial corporations are in pretty good shape. Unlike the 1990 and 2000 economic downturns, business gearing was kept low.  The top 100 American corporates have almost $US2 trillion in


NZ moves to limit exposure to housing

New Zealand has undertaken two policy actions lately aimed indirectly at reducing the economy’s exposure to the housing market. The first measure, called the Open Bank Resolution (OBR) Policy, has been initiated by the Reserve Bank of New Zealand (RBNZ) and seeks to protect taxpayers from funding future bank bailouts. The OBR is intended to


Picking losers

For some time now, there has been bipartisan support for a 5% reduction in emissions from 2000 levels, and Australia has committed this abatement effort under the Cancun agreement. Although it may sound small, a 5% reduction actually represents a very substantial abatement effort. In absence of mitigation policy, emissions under a “business as usual”


More dodgy disclosure

My previous post, Deep T’s (In) Stability Review, provoked some critical responses on the calculation of a bank’s capital. The record needs to be put straight, as these responses were wrong. As a world-renowned biologist and prominent atheist once said, “Never underestimate the ignorance of your critics”. So it’s back to school on Banks’ Capital 101,


Boom and bust is back

With Brent and WTI crude both surging to post-GFC highs Friday, I’m beginning to suspect that the world has entered a new era of oil price and growth volatility that spells the end of the Great Moderation. Why so? Supply and demand are the key to all things economic.  Previously at this site, the Unconventional


April 4 links: Oil high

Week ahead for the DOW. Calculated Risk Fukushima radiation. NYT Is the EU planning to invade Libya? Zero Hedge IMF wants Greek default. Reuters US/Saudi swapped Libya and Bahrain. Asia Times Told ya. The end of QE2. Alphaville America’s slow turnaround. The Economist What would the CPI look like if it included houses? Floyd Norris


Fresh calls for housing stimulus

Yesterday’s Australian Financial Review published an article entitled Capital house prices slide, which provided a sobering assessment of the housing market, particularly in Brisbane, Perth and Melbourne. House prices fell in most capitals in February and analysts expect poor affordability to prevent any real recovery for at least a year… Rp Data senior research analyst


Weekend musing: What’s a crash?

The saturday morning ritual of moving the yard apes between their various activities is over so it time to sit back for an afternoon of musings. Firstly, after yesterday’s little bomb drop from NAB on housing I note that Bill Evans from Westpac has joined in (h/t janet) with a bearish post on Business Spectator. A sustained relaxation and


Weekly Market Analysis – 1st April 2011

Conceal me what I am, and be my aid For such disguise as haply shall become The form of my intent. Shakespeare Summary Stocks rallied hard last night on the US and European markets after – well, choose your reason and stick to it really. Jobs? Corporate profits? No new meltdown? Cow mutilations are up?


Power hungry China

Analyst presentations can be tedious affairs, often an equal mix of the obvious and the dubious. But one I saw about China’s Five Year Plan’s implications of Australia really had me listening closely. The visiting China-based analyst was showing a slide of the projections of the growth in “low carbon” energy out to 2015. It


Weekend Reading: The mutt opens an eye

Rockets: energy, ore. Up: Aussie. Mixed: grains. Flat: $US Down: metals. Oil speculation. Daily Finance (h/t Naked Capitalism) The Mellon doctrine. Paul Krugman America’s the April Fool. Henry Blodget US ISM strong, BIS solid. Calculated Risk Jobs recovery path. Zero Hedge Syria, Yemen protests. Give them Bancor. Joseph Stiglitz IEA courts Chinese oil. FT Chinese shadow banking. FT China PMI accelerates. Bloomberg No slowing



Sigh…I’m having an angry week. Regular readers will know that I’m no fan of vested interests. But I make one exception. Right now, the nation DESPERATELY needs a new vested interest body to support the non-resource tradable goods sectors of manufacturing, tourism and education. I can’t remember a peep out of either the education sector


Fukushima and financial regulation

The Wall Street Journal has been running an excellent series of stories this week about the astounding lack of disaster preparedness at Tokyo Electric’s Fukushima nuclear plant. Among the revelations from this and other recent media reports: The plant’s disaster plan called for only one stretcher, one satellite phone, and 50 protective suits. In case


Did NAB just give up on housing ?

I am amazed how quickly the housing story is changing in Australia. Just 8 months ago anyone mentioning the fact that housing was heading for a correction was met with howls of laughter. I know, I was one of them. Today however sentiment is very different, and it seems to have gotten so bad that


China’s largest ghost city filled

At last, a good news story on China. Readers might remember that I posted an article in December showing alarming satellite photos of entire cities laying vacant (see China’s empty cities). In that article appeared the below photo of Zhengzhou New District, which was supposedly “China’s biggest ghost city, complete with entire blocks of totally


Boganomics: Negative hearing

Boganomics, along with its sister project Things Bogans Like, performs a crucial role in Australian society. While bogans may tell you that they want to bed you or glass you, they also have many other wants and needs that they are less adept at articulating. As the bogan’s unofficial mouthpiece, we simply must take exception to


Health Stocks Part 2: Excellent Elixirs

On Tuesday I published Part 1 of a two part series on healthcare stocks.  I described how the health care industry is in a market sweet spot – high levels of government support, recession-proof demand and a large group of wealthy, ageing consumers (Boomers) entering a time of their life where healthcare expenditure will significantly


Risks to the Aussie

The question I asked last week about Chinese growth and iron ore demand seems to have been answered for now. That question was the following: Not only has the market not priced a significant, if cyclical, China slowdown, if it comes, Chinese steel makers may very well enter an inventory cycle that liquidates some portion


April Fool’s Day links: Risks return

Rockets: grains, energy, ore. Up: Aussie, metals. Down:  $US Ireland 10 year, 2 year Another 24 billion for Irish banks. Reuters The road to default in Europe. BBC Fallout from Irish default. Bloomberg Radiation keeps coming. Reuters Japan PMI smacked. FT Long war. FT Regional Fed surveys on fire. Calculated Risk WalMart inflation alert. Zero Hedge Higher grain prices ahead. WSJ Now, actually. FT


Why Australians aren’t spending

Robert Gottliebsen today posted an interesting article on Business Spectator providing an insight into why Australians are cutting back on retail spending: Retailers have been looking closely at what is causing stress among Australians and among Australian consumers… Those in lower income suburbs or in areas where there are many high mortgage/low deposit new houses,


Subtle old Gotti

I think I need to apologise to Robert Gottliebsen. I think I misinterpreted his words last November when he said It might not be intentional, but in Australia banks have developed a unique system to keep dwelling prices high. They are liberal in granting housing loans, so there is a strong consumer demand for houses. But